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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

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Indexed universal life

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: What is your opinion of indexed universal life?

A: Indexed universal life is the latest type of insurance that may be describes as a cross between universal life (that uses floating interest rates) and variable life (that uses securities investments). The product promises better performance in this low interest rate environment, but without all of the risk inherent in the stock market. My opinion is that you should go one way or the other. Either you are seeking guarantees in your life insurance to make sure that it does not lapse or you are using it to build cash value for some other purpose. There probably should not be much middle ground. The marketers of these insurance products plays on the indecisiveness of buyers by trying to create a product that plays to both sides of the brain. There is no historical performance data on this product (performance illustrations are based on theoretical data) so it does not make sense to discuss financial performance of the product. In most cases a buyer will do better with another product IF the purpose of the insurance and the financial goal can be clearly defined.


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